Gillard urged to borrow for bold infrastructure plan

Business Council of Australia president
Tony Shepherd
has lashed the Gillard government for failing to deliver long-term infrastructure policies to fix ailing productivity and has called for a return to the policy reforms of the Hawke, Keating and Howard governments.

Demanding “bold national policy leadership", Mr Shepherd said the government should take advantage of low interest rates to fund infrastructure.

“Australia needs to recapture the reformist appetite and policy bravery that allowed us to take such substantial leaps forward between 1985 and 2000," he said. “This is a time for policy heroism, not a time for managing a genteel decline in national prosperity."

Speaking at an Infrastructure Partnerships Australia awards dinner, Mr Shepherd, chairman of Transfield Services, said that by 2050 Australia would need to increase annual spending on transport to more than $63 billion, a four-fold rise. A growing population will double demand for passenger transport over the next 25 years, he said. National freight capacity will triple in 40 years. Governments or users would have to pay – and for the federal government, debt has “never been cheaper", he said, characterising debt for infrastructure as “good" borrowing.

The national infrastructure projects could fill the gap from waning construction when the resources boom subsides, he added.

In January, RBA board members
Heather ­Ridout
and
John Edwards
called on state and federal governments to ­borrow for infrastructure projects.

Mr Shepherd went further: the ­federal government should adopt a “mechanism to reward or sanction states for achieving complex reforms".

“What is needed is a more transparent public debate about the options."

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“I hope as a businessman, as a taxpayer and as a commuter that the long lead up to September’s national election will see a genuine competition of ideas about infrastructure and the broader productivity debate."

He applauded moves by Queensland and NSW to contract out health services and sell assets respectively, criticising federal Treasurer
Wayne Swan
for opposing the Queensland move.

He acknowledged the federal ­government had done some good: the formation of Infrastructure Australia, which is public-private partnerships, was a “critical milestone".

Elsewhere, the federal opposition was targeted for its plans to repeal the mining and carbon taxes. Investment banker
Mark Carnegie
warned of considerable unease in business circles about the Opposition Leader’s stance.

“What is
Tony Abbott
actually going to do with a two-term government," Mr Carnegie asked businessmen. “When you have got Exxon and Shell and BHP all calling for a carbon tax … he is going to turn around and roll [it] back at a time when it’s clear that the revenues in the budget are under an immense pressure and [it’s] one of the least painful ways to raise a significant amount of money."

RBA and Woolworths board ­member
Jillian Broadbent
warned the Opposition risked throwing out the “baby with the bath water". Ms Broadbent is chairman of the Clean Energy Finance Corp, which Mr Abbott has vowed to scrap. “I do not know what he [Tony Abbott] is going to do, but I do have a concern … about discontinuity in public policy and that goes to the carbon tax, the NBN, the mining tax."

“Unfortunately, the pitch from the opposition is that we will unwind these things and I think there is a danger of throwing out the baby with the bath water."